The FTSE Finish Line - August 05 - 2024
FTSE Margin Call Monday!
FTSE 100 down 2.6% amidst wider drops, the benchmark index is expected to have its lowest day since March 2023. Fears of a US recession sparked a global sell-off on Monday, which saw London's FTSE 100 fall more than 2.5% and reach its lowest point in more than three months. The previous session saw the worst day since September 2022 for the mid-cap FTSE 250 index, which was down 3%.
Fears of a decline in the labor market and a possible recession increased after Friday's statistics revealed a severe slowdown in U.S. job creation. This led investors to increase their bets on a half-point decrease by the Federal Reserve in September to boost the economy. Concerns about a U.S. recession drove down oil prices, which also caused energy shares to drop 2.7%. O/R In a week that is otherwise devoid of statistics, domestic manufacturing activity figures are scheduled for release later in the day.
Most sub-sectoral indicators in London showed a downward trend. The worst-hit industries were auto and parts, which had a 3.9% decline, and precious metal miners, despite a strengthening gold price, saw a 3.2% decline. Financial stocks experienced a 3.1% and 3.7% fall, respectively, including banks and life insurers.
Barclays downgrades UK water utilities due to negative sector outlook; shares decline
Pennon, United Utilities, and Severn Trent shares fall 4%-5% Barclays downgrades United Utilities to Underweight, cuts price target to 975p from 1315p Barclays downgrades Severn Trent and Pennon to Equal Weight, cuts price targets to 2500p and 685p, respectively
Barclays cites Ofwat's Draft Determinations and companies' annual performance reports as reasons for the negative outlook Ofwat's final decision on future bills and investment is expected to be delayed into January, with a further 6-9 months delay on a CMA referral submission.
John Wood Group in the UK reaches a low point of more than 18months after Sidara abandons its purchase proposal. The largest loser on the FTSE mid cap index is John Wood Group, a British engineering and oilfield services company, whose shares fell 37%. This is the lowest the stock has been since December 2022. The engineering and consultancy company Sidara, located in Dubai, says it has no plans to submit a formal offer to purchase WG. In May and June, Sidara made three approaches to WG, raising the offer from 205 to 230 pence per share, which it declared would be its best offer. WG's stock was up roughly 14.5% year to date as of the most recent close.
Technical & Trade View
FTSE Bias: Bullish Above Bearish below 8225
Primary resistance 8400
Primary objective 7750
Daily VWAP Bearish
Weekly VWAP Bearish
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!